Morgan Stanley · NYSE:MS
Morgan Stanley — UBS Global Financial Services Conference 2003
32 slides from Morgan Stanley's conference presentation, Apr 29, 2003
Slide 1: Morgan Stanley presentation, April 29, 2003
Philip J. Purcell, Chairman & CEO Stephen S. Crawford, Chief Financial Officer Vikram S. Pandit, Co-Head of Institutional Securities April 29, 2003
Slide 2: Business Mix – 1Q03 Results
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_2 Business Mix – 1Q03 Results Net revenues Net income Individual Investor Group Institutional Individual Institutional n/a Securities Investor Group Securities 58% 16% 68% Investment 12% Management 10% Investment Management 16% 20% Cr
Slide 3: Vikram S. Pandit, Co-Head of Institutional Securities
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_3 Vikram S. Pandit, Co-Head of Institutional Securities This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to
Slide 4: GAAP Income Statement View
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_4 GAAP Income Statement View 1Q03 Net Revenues Other 2% Investment Banking Interest and Dividends 16% 24% Asset Mgmt, Dist. & Admin. 1% 13% 44% Principal Transactions Commissions Total: $3.1Bn Source: Company filings This slide is par
Slide 5: Institutional Securities – Business View
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_5 Institutional Securities – Business View 1Q03 Net Revenues Other 1% Underwriting Revenue Advisory Revenue 11% Equity Sales and Trading 5% 31% 52% Fixed Income Sales and Trading Total: $3.1Bn Source: Company filings This slide is par
Slide 6: Business Mix
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_6 Business Mix Institutional Securities Services Market Making Advisory • Prime Brokerage • Equities • Investment Banking − Underwriting • MSCI • Fixed Income − Mergers and acquisitions − Commodities • Research This slide is part of a
Slide 7: Services
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_7 Services • Analytics • Indices • Financing • Settlement • Securities lending • Tax • Technology This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is ba
Slide 8: Services – Prime Brokerage
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_8 Services – Prime Brokerage Morgan Stanley Prime Brokerage Net Revenues Indexed to 100 350 A GR : 19% 329 C 300 250 200 150 100 100 50 0 1995 2002 Source: Internal Company information This slide is part of a presentation by Morgan St
Slide 9: Market Making – Equities Business Model
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_9 Market Making – Equities Business Model Strengthens Client Lowers Risk Increase Flow Relationships This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is
Slide 10: Market Making – Fixed Income Business Model
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_10 Market Making – Fixed Income Business Model • Principal markets • Thousands of instruments • Robust over-the-counter market • Market share not entirely meaningful measure This slide is part of a presentation by Morgan Stanley and i
Slide 11: Market Making – Revenue Drivers
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_11 Market Making – Revenue Drivers • Trading Volumes • Volatility • Primary Activity • Market Direction • Market Share This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. T
Slide 12: Market Making – Equities – Built Through Technology
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_12 Market Making – Equities – Built Through Technology OTC Market Making Automated Options Market Making Total Number of Stocks • Developed “next generation” 1,600 derivatives market making technology and strategy • Making markets in
Slide 13: Market Making – Information Technology Efficiency
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_13 Market Making – Information Technology Efficiency • Average Trade Volume continues to grow − 1999/2000 – up 79% − 2000/2001 – up 41% − 2001/2002 – up 33% − 2002/2003 – up ~40% • 2003 Peak volumes 100% greater than average 2002 leve
Slide 14: Market Making – Fixed Income Market Dynamics
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_14 Market Making – Fixed Income Market Dynamics • Significant drop in global interest rates • Increase in risk aversion • Shift in sales and trading customer flows • Structural change in commodities markets • Business line expansion i
Slide 15: Market Making – Risk Efficiency
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_15 Market Making – Risk Efficiency Quarterly Sales and Trading Net Revenues $ (%) 3,000 4.5 4.0 2,500 3.5 2,000 3.0 2.5 1,500 2.0 1,000 1.5 1.0 500 0.5 0 0.0 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 Total Sales & Trading One-day 9
Slide 16: Market Making – Diversification
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_16 Market Making – Diversification Sales and Trading Net Revenues (% Total) 42% 49% 46% 47% 48% 40% 49% 55% 63% 58% 51% 54% 53% 52% 60% 51% 45% 37% 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 Equity Fixed Income Average Quarterly Sal
Slide 17: Market Making – Fixed Income
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_17 Market Making – Fixed Income Fixed Income Sales and Trading Net Revenues ($ millions) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 Fixed Income Revenues Avg. Fixed Income Revenues Sou
Slide 18: Market Making – Equities
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_18 Market Making – Equities Equity Sales and Trading Net Revenues ($ millions) 1,600 1,400 1,200 1,000 800 600 400 200 0 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 Equities Revenues Avg. Equities Revenues Source: Company filings Thi
Slide 19: Advisory
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_19 Advisory • Investment Banking − Underwriting − Mergers and acquisitions • Research This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on infor
Slide 20: Advisory – Morgan Stanley Market Position
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_20 Advisory – Morgan Stanley Market Position Institutional Securities FY 2002 4Q02 1Q03 Global Equity Underwriting Market Share 7.4 % 14.5 % 15.6 % Rank 5 1 2 Global Investment Grade Underwriting Market Share 7.4 % 6.6 % 6.6 % Rank 3
Slide 21: Advisory – Morgan Stanley Market Position (Research)
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_21 Advisory – Morgan Stanley Market Position Research 2002 Institutional Investor Global Research Poll 1 Greenwich Associates U.S. Equity Research Survey 1 Sources: Institutional Investor, Greenwich Associates This slide is part of a
Slide 22: Advisory – Market Pressures
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_22 Advisory – Market Pressures • Capital intensity − Cyclical vs. secular • Competition − Market share does not necessarily equal profitability • e.g., convertible transactions bid under par and sold at par • Lending − View as product
Slide 23: Lending
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_23 Lending Total Loans and Commitments ($ billions) 18.8 17.6 14.6 14.0 14.3 13.6 12.6 11.0 10.0 10.2 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 Investment Grade % Total 76% 67% 81% 78% 78% 75% 75% 81% 86% 85% Investment Grade
Slide 24: Institutional Securities – Conclusion
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_24 Institutional Securities – Conclusion • Environment continues to be challenging • Executing well through the cycle • Morgan Stanley a differentiated franchise This slide is part of a presentation by Morgan Stanley and is intended t
Slide 25: Stephen S. Crawford and Philip J. Purcell
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_25 Stephen S. Crawford and Philip J. Purcell This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public
Slide 26: Aircraft Leasing
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_26 Aircraft Leasing • Severe global downturn in travel industry • Significant excess capacity • Few healthy airlines • Supply/demand imbalance beginning to correct • Economic stability a prerequisite for valuation assessment • Recent
Slide 27: Financial Strength
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_27 Financial Strength Total Capital(1) ($Bn) $72.4 $65.9 $61.6 $49.6 47.9 $37.9 $39.7 42.8 39.7 29.9 23.4 22.3 19.7 21.9 23.1 24.5 14.5 17.4 1998 1999 2000 2001 2002 1Q03 Equity Long-Term Debt Source: Company filings Note: (1) Include
Slide 28: Balance Sheet Leverage
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_28 Balance Sheet Leverage Adjusted Leverage(1) as of 4Q02 25 20 19.2x 16.2x 16.6x 15.2x 15 10 5 0 Lehman Brothers Merrill Lynch Morgan Stanley Goldman Sachs Source: Company filings. Additional information regarding Morgan Stanley’s le
Slide 29: Return on Equity
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_29 Return on Equity (1) Avg. ROE 1Q03 ROE 2002 ROE 1997-2002 Morgan Stanley 16.3% 14.8% 23.7% MER 11.8% 12.0% 18.5% LEH 13.9% 12.2% 17.9% GS (2) 13.7% 11.3% 20.6% Source: Company filings Notes: (1) Excludes restructuring charges, regu
Slide 30: Growth in Morgan Stanley Book Value
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_30 Growth in Morgan Stanley Book Value Book Value per Share 25 A GR : 14% C $20.24 20 $18.64 $16.91 $14.85 15 $11.94 10 5 0 1998 1999 2000 2001 2002 This slide is part of a presentation by Morgan Stanley and is intended to be viewed a
Slide 31: Firmwide 2003 Initiatives
L:\eps\Conference\UBS global financial services\UBS.ppt_4/29/2003_31 Firmwide 2003 Initiatives • Superior financial performance • Improve market share across all major businesses • Positively differentiate the Firm’s reputation and brand • Ensure Firm is well-positioned for industry consolidation •
Slide 32: Philip J. Purcell, Chairman & CEO
Philip J. Purcell, Chairman & CEO Stephen S. Crawford, Chief Financial Officer Vikram S. Pandit, Co-Head of Institutional Securities April 29, 2003
Morgan Stanley — UBS Global Financial Services Conference 2003 on 6ix